Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 189571 January 21, 2015

THE HONORABLE MONETARY BOARD and GAIL U. FULE, Director, Supervision and
Examination Department II, and BANGKO SENTRAL NG PILIPINAS, Petitioners,
vs.
PHILIPPINE VETERANS BANK, Respondent.

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 dated June 15, 2009 and Order2 dated August 25, 2009 of the
Regional Trial Court (RTC) of Makati City in Civil Case No. 07-271.

The factual antecedents follow.

Respondent established a pension loan product for bona fide veterans or their surviving spouses, as
well as salary loan product for teachers and low-salaried employees pursuant to its mandate under
Republic Act (RA) Nos. 35183 and 71694 to provide financial assistance to veterans and teachers.

As its clientele usually do not have real estate or security to cover their pension or salary loan, other
than their continuing good health and/or employment, respondent devised a program by charging a
premium in the form of a higher fee known as Credit Redemption Fund(CRF) from said borrowers.
Resultantly, Special Trust Funds were established by respondent for the pension loans of the
veteran-borrowers, salary loans of teachers and low-salaried employees. These trust funds were, in
turn, managed by respondent’s Trust and Investment Department, with respondent as beneficiary.
The fees charged against the borrowers were credited to the respective trust funds, which would
beused to fully pay the outstanding obligation of the borrowers in case of death.

On April 30, 2002, an examination was conducted by the Supervision and Examination Department
(SED) II of the Bangko Sentral ng Pilipinas (BSP). It found, among other things, that respondent’s
collection of premiums from the proceeds of various salary and pension loans of borrowers to
guarantee payment of outstanding loans violated Section 54 of RA No. 8791 5 which states that
banks shall not directly engage in insurance business as insurer.

Subsequently, respondent wrote a letter to petitioners justifying the existence of the CRF.

In a letter dated March 17, 2003, the BSP notified respondent about the Insurance Commission’s
opinion that the CRF is a form of insurance. Thus, respondent was requested to discontinue the
collection of said fees.

On February 24, 2004, respondent complied with the BSP’s directive and discontinued the collection
of fees for CRF.
On September 16, 2005, petitioners issued Monetary Board (MB) Resolution No. 1139 directing
respondent’s Trust and Investment Department to return to the borrowers all the balances of the
CRF in the amount of ₱144,713,224.54 as of August31, 2004, and to preserve the records of
borrowers who were deducted CRFs from their loan proceeds pending resolution or ruling of the
Office of the General Counsel of the BSP. Thus, respondent requested reconsideration of said MB
Resolution. However, the same was denied ina letter dated December 5, 2006.

Accordingly, respondent filed a Petition for Declaratory Relief with the RTC of Makati City.

In response, petitioners filed a Motion to Dismiss alleging that the petition for declaratory relief
cannot prosper due to respondent’s prior breach of Section 54 of RA No. 8791.

In an Order6 dated September 24, 2007, the RTC dismissed respondent’s petition for declaratory
relief and held as follows:

Upon a thorough analysis of the allegations of the petition and the documents attached thereto as
annexes,the arguments of both parties in support of their respective position on the incident up for
resolution, the Court finds that an ordinary civil action or other else but certainly not the present
action for declaratory relief, is the proper remedy.

Clearly, as gleaned from the verydocuments attached to the petition, and as correctly pointed out by
the [petitioners], [respondent], as found by the BSP examiners and confirmed by the Monetary
Board, violated Section 54 of RA No. 8791, subject matter of the instant case, by engaging in an
insurance activity which is prohibited by such law. To be precise, the law so provides thus: "SEC. 54.
Prohibition to Act as Insurer. A bank shall not directly engaged (sic) in the business as the insurer."

Hence, the issue of whether or not petitioner violated the foregoing law can only be fittingly resolved
thru an ordinaryaction. For which reason, the Court has no recourse but to put an end to this case.

In view of the foregoing, the Court deems it unnecessary to tackle the other grounds relied upon by
[petitioners] in their motion to dismiss.

WHEREFORE, for reasons afore-stated, the petition is hereby DISMISSED.

SO ORDERED.

Almost a year later, respondent filed a Motion to Admit its Motion for Reconsideration against said
order alleging that it did not receive a copy thereof until September 3, 2008.

Petitioners opposed said motion on the ground that per Certification of the Philippine Postal Office,
an official copy of the RTC’s Order was duly served and received by respondent on October 17,
2007.

Despite the foregoing, the RTC allowed respondent’s motion for reconsideration and required
petitioners to file their answer.

In a Decision dated June 15, 2009,the RTC of Makati City granted respondent’s petition for
declaratory relief disposing as follows:

WHEREFORE, premises considered, it is hereby DECLARED that [respondent], when it collected

additional fees known as "Credit Redemption Fund (CRF)" from its loan borrowers was not directly
engaged in insurance business as insurer; hence, it did not violate Sec. 54, R.A. 8791, otherwise
known as the "General Banking Law of 2000."

The Monetary Board Resolution No. 1139 dated August 26, 2005 is hereby DECLARED null and
void.

SO ORDERED.7

Petitioners filed a motion for reconsideration against said decision, but the same was denied in
anOrder dated August 25, 2009.

Hence, the present petition wherein petitioners raise the following grounds to support their petition:

I.

THE COURT A QUOGRIEVOUSLY ERRED IN TAKING COGNIZANCE OF THE PETITION FOR

DECLARATORY RELIEF DESPITE:

(i) THE FINALITY OF THE BSP MB RESOLUTION: (a) DECLARING RESPONDENT

VETERANS BANK’S CRF SCHEME AS VIOLATIVE OF SECTION 54 OF RA 8791; and (b)
DIRECTING RESPONDENT TO RETURN THE ILLEGAL PROCEEDS THEREOF TO ITS
BORROWERS; and

(ii) THE BLATANT IMPROPRIETY OF RESORTING TO SUCH PETITION FOR

DECLARATORY RELIEF, CONSIDERING RESPONDENT VETERANS BANK’S PRIOR
BREACH OF THE MONETARY BOARD RESOLUTION SUBJECT THEREOF [ASSUMING
ARGUENDO THAT THE SUBJECT BSP RESOLUTION HASNOT BECOME FINAL];

II.

THE COURT A QUO’S ORDER, DISMISSING THE PETITION FOR DECLARATORY RELIEF HAS
LONG BECOME FINAL AND EXECUTORY AND MAY NO LONGER BE DISTURBED.

III.

PETITIONERS’ FINDING,THAT RESPONDENT VETERANS BANK IS ENGAGED IN "INSURANCE

BUSINESS," IS IN ACCORD WITH LAW.8

In essence, the issue is whether or not the petition for declaratory relief is proper.

We rule in the negative.

Section 1, Rule 63 of the Rules of Court governs petitions for declaratory relief, viz.:

SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation, ordinance,
or any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and for
a declaration of his rights or duties, thereunder.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or other
written instrument, executive order or resolution, to determine any question of construction or validity
arising from the instrument, executive order or regulation, or statute; and for a declaration of his
rights and duties thereunder. The only issue that may be raised in such a petition is the question of
construction or validity of provisions in an instrument or statute. 9 Ergo, the Court, in CJH
Development Corporation v. Bureau of Internal Revenue, 10 held that in the same manner that court
decisions cannot be the proper subjects of a petition for declaratory relief, decisions of quasijudicial
agencies cannot be subjects of a petition for declaratory relief for the simple reason that if a party is
not agreeable to a decision either on questions of law or of fact, it may avail of the various remedies
provided by the Rules of Court.

In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper subject matter
for a petition for declaratory relief since it was issued by the BSP Monetary Board inthe exercise of
its quasi-judicial powers or functions.

The authority of the petitioners to issue the questioned MB Resolution emanated from its powers
under Section 3711 of RA No. 765312 and Section 6613 of RA No. 879114 to impose, at its discretion,
administrative sanctions, upon any bank for violation of any banking law.

The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of its
determination of whether or not appropriate sanctions may be imposed upon erring banks, as
anexercise of quasi-judicial function, have been recognized by this Court in the case of United
Coconut Planters Bank v. E. Ganzon, Inc.,15 to wit:

A perusal of Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1, Rule 43 of the
1997 Rules of Civil Procedure reveals that the BSP Monetary Board is not included among the quasi
judicial agencies explicitly named therein, whose final judgments, orders, resolutions or awards are
appealableto the Court of Appeals. Such omission, however, does not necessarily mean that the
Court of Appeals has no appellate jurisdiction over the judgments, orders, resolutions, or awards of
the BSP Monetary Board.

It bears stressing that Section 9(3) of Batas Pambansa Blg. 129, as amended, on the appellate
jurisdiction of the Court of Appeals, generally refers to quasi-judicial agencies, instrumentalities,
boards or commissions. The use of the word "including" in the said provision, prior to the naming of
several quasi-judicial agencies, necessarily conveys the very idea of non-exclusivity of the
enumeration. The principle of expressio unius est exclusio alterius does not apply where other
circumstances indicate that the enumeration was not intended to be exclusive, or where the
enumeration is by way of example only.

Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions several
quasi-judicial agencies without exclusivity in the phraseology. The enumeration of the agencies
therein mentioned is not exclusive. The introductory phrase "[a]mong these agencies are" preceding
the enumeration of specific quasi-judicial agencies only highlights the fact that the list is not meant to
be exclusive or conclusive. Further, the overture stresses and acknowledges the existence of other
quasi-judicial agencies not included inthe enumeration but should be deemed included.

A quasi-judicial agency or body isan organ of government other than a court and other thana
legislature, which affects the rights of private parties through either adjudication or rule-making. The
very definition of an administrative agency includes itsbeing vested with quasi-judicial powers. The
ever increasing variety of powers and functions given to administrative agencies recognizes the
need for the active intervention of administrative agencies in matters calling for technical knowledge
and speed in countless controversies which cannot possibly be handled by regular courts. A "quasi-
judicial function" is a term which applies to the action, discretion, etc. of public administrative officers
or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings,
and draw conclusions from them, as a basis for their official action and to exercise discretion of a
judicial nature.

Undoubtedly, the BSP Monetary Board is a quasi-,judicial agency exercising quasi-,judicial powers
or functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent
1âwphi1

central monetary authority and a body corporate with fiscal and administrative autonomy, mandated
to provide policy directions in the areas of money, banking, and credit. It has the power to issue
subpoena, to sue for contempt those refusing to obey the subpoena without justifiable reason, to
administer oaths and compel presentation of books, records and others, needed in its examination,
to impose fines and other sanctions and to issue cease and desist order. Section 37 of Republic Act
No. 7653, in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion
in determining whether administrative sanctions should be imposed on banks and quasi-banks,
which necessarily implies that the BSP Monetary Board must conduct some form of investigation or
hearing regarding the same.16

A priori, having established that the BSP Monetary Board is indeed a quasi-judicial body exercising
quasi-judicial functions, then its decision in MB Resolution No. 1139 cannot be the proper subject of
declaratory relief.

Lastly, also worth noting is the fact that the court a quo's Order dated September 24, 2007, which
dismissed respondent's petition for declaratory relief, had long become final and executory.

To recall, said Order was duly served on and received by respondent on October 1 7, 2007, as
evidenced by the Ce1iification issued by the Philippine Postal Corporation. Almost a year later,
however, or on October 15, 2008, respondent moved for reconsideration of the court a quo's Order
of dismissal, claiming it received a copy of said Order only on September 3, 2008. Thus,
respondent's self-serving claim should not have prevailed over the Certification issued by the
Philippine Postal Corporation. It was error for the trial court to ente1iain it for the second time despite
the lapse of almost a year before respondent filed its motion for reconsideration against said Order.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Decision dated
June 15, 2009 and Order dated August 25, 2009 of the Regional Trial Court of Makati City in Civil
Case No. 07-271 are REVERSED and SET ASIDE. The Order dated September 24, 2007 of the
Regional Trial Court ofMakati City is hereby REINSTATED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice